Reshape the list into a matrix
Cut a chain of twelve spins after the fourth spin. The left part has sixteen patterns and the right part has 256. Put the amplitude of each full pattern in the row of its left part and the column of its right part. The state is now a sixteen by 256 matrix, and nothing has been lost.
If the matrix has rank one, every row is a multiple of the same row. The state is then a single left state times a single right state, a product state, and the two sides are independent. Higher rank means the two sides are entangled: what the right part looks like depends on which left pattern you find.
Singular values become Schmidt weights
The singular value decomposition writes the matrix as a sum of rank-one pieces, each a column of left vectors times a row of right vectors, scaled by a non-negative singular value. The left vectors are orthonormal, and so are the right vectors. Read back as quantum states, this is the Schmidt decomposition. Schollwöck sets it out in Section 4.1.1 of his review.
For a normalized state the squared singular values add up to one, so they behave like probabilities. They are the Schmidt weights. The entanglement entropy is the entropy of these weights. It is zero for one weight equal to one, and it is largest, the logarithm of the number of terms, when all the weights are equal.
Worked example
Work out two spins and a cat state
Calabrese and Cardy open their 2004 paper with two spins in a state that has the first spin up and the second down with one amplitude, and the reverse with another. As a matrix with the first spin as rows and the second as columns, the state has only off-diagonal entries. Its singular values are the magnitudes of the two amplitudes, so the Schmidt weights are their squares. When both weights are one half, the entropy reaches its largest value for two spins, the natural logarithm of two.
Now take a chain whose spins all point the same way, in a superposition of all along one direction and all along the opposite direction, with equal weight. Every cut gives exactly two Schmidt weights of one half, so every cut carries the logarithm of two, about 0.693. The compression Lab cat-state preset is the Ising ground state at a field of 0.3, close to this picture. Its middle cut carries 0.6935.
The entropy along a critical chain
Move the cut along the chain and record the entropy at each position. For a gapped chain the curve quickly flattens to a constant away from the ends. For a critical chain it keeps rising towards the middle. Calabrese and Cardy derived its shape for an open critical chain from conformal field theory, in their Eq. 2. The coefficient is one sixth of the central charge, which is one half for the critical Ising chain.
You can test that shape without any approximation. Peschel showed that for chains that map to free fermions, including those with pairing terms such as the Ising chain, the Schmidt weights of a block follow from its correlation matrix. Fitting the profile of the exact ground state over the middle half of the chain gives a central charge of 0.524 for 32 spins, then 0.512, 0.506 and 0.503 for 64, 128 and 256 spins. The fit approaches one half as the chain grows. The DMRG Lab plots the same law, with the central charge fixed and only the constant fitted, beside the profile its run measures.